Fourth quarter 2017 - Fourth quarter 2017 - Magnora ASA
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Fourth quarter 2017 Fourth quarter 2017
Fourth quarter 2017
Highlights
(Figures in brackets relate to previous period. The figures are unaudited.)
• Operating revenue was NOK 16.3 million in the fourth quarter, up from NOK 12.8 million in the third quarter 2017. The increase
was mainly due to Dana Western Isles royalty revenue of NOK 3.2 million in the fourth quarter 2017. Adjusted EBITDA, excluding
one-off items, was NOK -4.0 million, an improvement from NOK -7.6 million in third quarter.
• Operating costs, including one-off items, decreased by NOK 16.8 million compared to third quarter 2017 to NOK 22.6 million.
These costs include NOK 2.2 million in legal fees related to one-off items. Excluding one-off items, operating costs in the quarter
were stable at NOK 20.4 million (NOK 20.4 million).
• Dana Western Isles started production in November 2017 and has produced steadily and in line with expectations. Sevan Marine
is entitled to USD 0.5 per barrel produced and offloaded. The royalty for Q4 2017 was NOK 3.2 million.
• Sevan Marine is in a solid financial position. The company has no interest bearing debt, is in a net cash position of NOK 197.5
million as of Q4 2017 and has an equity ratio of 83 percent.
• The board of Sevan Marine will propose to the Annual General Meeting (AGM) a cash dividend of NOK 0.50 per share. The
dividend will be paid after the AGM to be held on 24 May 2018. The board will also consider future dividends depending on the
financial performance and future cash flow development in the company.
Key figures
NOK million Q4 17 Q3 17 2017 Q4 16 2016
Revenues 16.3 12.8 54.3 18.3 117.1
EBITDA -6.2 -26.6 -62.3 -16.0 -104.0
Net Profit -8.5 -30.1 -23.7 -9.7 -241.4
EPS (NOK) -0.16 -0.57 -0.45 -0.18 -4.59
Operating cost, excluding one-off items * -20.4 -20.4 -85.9 -24.9 -146.8
Adjusted EBITDA * -4.0 -7.6 -31.6 -6.6 -29.7
Cash and cash eq. 197.5 161.6 197.5 213.9 213.9
Equity ratio (%) 83 % 87 % 83 % 60 % 60 %
Number of shares outstanding 52.6 52.6 52.6 52.6 52.6
Number of employees 32 32 32 35 35
* See definition of Alternative Performance Measures in Note 1.
Revenue, NOK million EBITDA, NOK million
20 0
-4.0
-6.6 -8.9 -7.6
-11.1
-10
10
18.3
16.3
12.1 13.1 12.8 -20
One-off items Adjusted EBITDA
0 -30
Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017
2Fourth quarter 2017
Operational review
includes work on a new drilling application, a floating power
Work on existing projects distribution hub and a new fish farming concept.
Sevan Marine delivered engineering services in the quarter
mainly to the Goliat, Dana Western Isles, Shell Penguins Sevan Marine will continue developing new applications for its
Redevelopment and HiLoad FRD Regas projects. cylindrical hull technology and related concepts with the objective
of delivering cost effective solutions to existing and new offshore
Sevan Marine also provided engineering and marine operations markets.
support to the Teekay Offshore Partners operated units during
the quarter. Subsequent developments
The final investment decision regarding the Shell Penguins
The Dana Western Isles project started production in November
Redevelopment project was taken in January 2018. Sevan
2017. Sevan Marine is entitled to a variable license fee of USD
Marine has invoiced the first milestone payment of USD 2.625
0.50 per barrel produced and offloaded from the unit. The
million under the license agreement in Q1 2018. Further
associated license income for the fourth quarter 2017 was NOK
payments remain subject to completion of the unit, start-up and
3.2 million.
successful production. Sevan Marine is to continue to provide
engineering support during construction of the unit. Total
Prospective projects and studies revenue from the Shell Penguins Redevelopment project,
including license income, is expected to be in the range of USD
Sevan Marine continues to market its cost effective, cylindrical
19 to 20 million over the coming 3 to 4 years
design for various projects in the UK sector of the North Sea,
Norwegian Barents Sea and Australia.
On the basis of the approval by the Annual General Meeting of
May 24, 2017 to authorize the Board of Sevan Marine to issue
During the fourth quarter, Sevan Marine carried out various paid
new shares to employees under a long-term incentive program,
and unpaid, early phase concept studies in relation to these
the Board has resolved to issue options to employees of the
potential developments. It is a positive signal that oil companies
company.
are once again starting new concept studies for new field
developments.
A total of 298,936 options for shares of the company is intended
to be distributed amongst the members of the executive
Progress on new developments management and a total of 750,899 options for shares of the
Sevan Marine’s subsidiary HiLoad LNG continued the marketing company is intended to be distributed amongst other employees.
and development of both the HiLoad LNG offloading system for Each option, when exercised, will give the right to acquire one
FLNG and the Floating Regas Dock (“FRD”) for small scale share in the company. The options are granted without
regasification projects in the quarter. consideration. Pursuant to the vesting schedule, 1/3 of the
options will vest 12 months after the day of grant (as long as the
option holder is still employed). Thereafter, 1/3 of the remaining
A pre-FEED for the FRD regas technology was carried out in Q3
options will vest each year as long as the option holder is still
2017 through the previously announced cooperation with Fluor
employed. The exercise price is equal to NOK 10 per share. The
Corporation. In the fourth quarter, the potential end client
options that have not been exercised will lapse 5 years after the
selected an alternative regas concept to take forward.
date of grant.
Sevan Marine has also continued to work on new developments
based on the cylindrical hull technology and expertise. This
3Fourth quarter 2017
Financial review
Results for the quarter Financial position
Operating revenue for the fourth quarter 2017 was NOK 16.3 The equity ratio was 83 percent as of 31 December 2017.
million, up from NOK 12.8 million the previous quarter. EBITDA
was negative NOK 6.2 million (negative NOK 26.6 million) and Balance sheet composition year end 2017:
net loss was NOK 8.5 million (loss of NOK 30.1 million). EBITDA
was positively impacted by the Dana Western Isles royalty of NOK million
NOK 3.2 million in the quarter. Net loss was positively impacted Current receivables
200 Current liabilities
by currency exchange effects of NOK 3.9 million mainly related
to realized gains. Net loss was negatively impacted by a tax
provision of NOK 6.5 million related to a potential tax penalty in
connection with an error and adjustment of the 2014 tax 150
assessment.
100 Equity
Results for the year Cash
Operating revenue from continued operation for 2017 was NOK
54.3 million, down from NOK 117.1 million in 2016. The decrease 50
of NOK 62.8 million was mainly caused by reduced activity in
ongoing projects and the cancellation of the Logitel units.
EBITDA was negative NOK 62.3 million (NOK 104.0 million), and 0
was negatively impacted by NOK 30.7 million in one-off items Assets Equity and liabilities
related to legal fees of NOK 15.8 million, restructuring of NOK
3.8 million and the Logitel arbitration settlement of NOK 11.1
million. Loss before tax was NOK 56.5 million (NOK 247.1 Logitel Offshore
million) and was impacted by a positive effect of NOK 6.5 million
We refer to the earnings release in the second quarter of 2016
related to the settlement of a historical fine on FPSO Piranema.
and comments made regarding the circumstances surrounding
Net loss was NOK 23.7 million (NOK 241.4 million) and was
the legality and potential claims in relation to the Logitel Offshore
impacted by a positive outcome of the 2012 tax case of NOK
Agreements.
39.3 million offset by the provision for potential penalty tax of
NOK 6.5 million related to the 2014 tax assessment.
Sevan Marine reserves the right to, at any time, pursue other
involved parties. Agreements suspending time-bar limitations
Cash Flow have been entered into with such involved parties.
As of 31 December 2017, cash and cash equivalents amounted
to NOK 197.5 million compared to NOK 161.6 million in the third We refer to the press releases of October 9th 2017 and
quarter. The positive cash flow in the quarter of NOK 35.9 million November 8th 2017 related to the Logitel bond loan court case.
is mainly related to the Logitel arbitration settlement of NOK 35.7 The Oslo District Court ruled against Sevan Marine ASA's
million paid in October 2017. subsidiary Sevan Holding V AS in relation to the USD 60 million
loan granted to Logitel Offshore Pte Ltd. The ruling has been
Cash flow for continued operations in 2017 was negative NOK appealed. The appeal date has been set for September 2019.
16.5 million, largely impacted by one-off net positive cash flow of
NOK 15.0 million.
4Fourth quarter 2017
Risk and uncertainty factors
Sevan Marine is exposed to market risk, credit risk, currency risk the U.S. Patent No. 9,266,587. Sevan Marine believes the case
and liquidity risk. The company’s overall risk management is without merit and will vigorously defend it. The plaintiffs have
program focuses on the uncertainty of financial markets and not yet quantified their claim for damages. Sevan Marine does
seeks to minimize potential adverse effects on the company’s not believe that this will result in any material negative
financial performance. consequences with respect to either existing or future uses of the
Sevan technology. Sevan Marine was formally served the lawsuit
Sevan Marine’s major customers are typically oil companies with during the fourth quarter and expects increasing legal costs
a strong financial basis, but, as with suppliers and customers in during coming quarters to defend the case.
general, there is a risk that unforeseen financial difficulties on the
counterparty’s side may arise which could have material adverse
effects on the financial condition, the cash flows and/or the Outlook
prospects of Sevan Marine.
During the fourth quarter 2017 and first quarter 2018, Sevan
Marine secured future income on both the Dana Western Isles
The exposure to the oil and gas market also means that the and Shell Penguins Redevelopment projects. The income from
company is subject to the market risk of declining work and price these two projects will have a positive impact on the financial
pressure. The company is also subject to field development and performance for 2018 and beyond. Sevan Marine will also
reservoir risk in situations where the license fee is tied to
continue to provide engineering support to the Sevan Marine
production. designed units currently in operation.
The outcome of the Logitel bond loan case and the timing or Sevan Marine is optimistic that it can win further early phase
ability to recover any award remains highly uncertain. Despite study work in 2018 with respect to key prospects in the North
Sevan Marine’s belief that the appeal will be successful, there Sea, Barents Sea and/or Australia. This is despite many key
remains material uncertainty regarding both the amount and prospects being delayed at the end of 2017 and a low workload
timing of any potential payments in relation to this case. in the first quarter of 2018.
As previously described the Board initiated and received in 2015 Sevan Marine expects its underlying operating costs to decrease
an external investigation report regarding allegations of possible further in 2018. However, one-off legal costs associated with the
improper conduct related to historical contracts with Petrobras in patent infringement case in the U.S. and the ongoing Logitel
Brazil from Advokatfirmaet Selmer DA (“Selmer”). Sevan Marine dispute will continue to weigh negatively on overall results.
provided the report to the Norwegian authority for investigation
and prosecution of economic and environmental crime
Sevan Marine remains confident that given its unique cost
(“ØKOKRIM”). Sevan Marine has made no payments and had no
effective solutions, the increased market interest, its solid cash
interaction with the agent in question or any of his companies
position and strong balance sheet that it has the resources and
since the IPO of drilling activities and restructuring of Sevan
ability to regain growth and profitability.
Marine ASA in 2011. Sevan Marine is cooperating fully with
relevant authorities in the various jurisdictions involved (Norway,
Brazil, US and UK). Sevan Marine adheres to the strictest of
compliance and ethical standards and continues to take this Dividend
matter very seriously. Sevan Marine ASA has to date not been The board of Sevan Marine will propose to the Annual General
charged by any of the authorities involved. Meeting (AGM) a cash dividend of NOK 0.50 per share. The
dividend will be paid after the AGM to be held on 24 May 2018.
The board will also consider future dividends depending on the
Sevan Marine ASA was informed during third quarter 2017 that
financial performance and future cash flow development in the
Sembmarine SSP Inc. and Jurong Shipyard Pte Ltd have
company.
initiated patent infringement proceedings against Sevan Marine
ASA as well as Sevan Drilling Ltd and Sevan Drilling North
America LLC in the Southern District Court of Texas in relation to
5Fourth quarter 2017
About Sevan Marine
Sevan Marine is a technology, design and engineering company. The Sevan Marine cylindrical design is widely seen by oil majors
The company is developing, designing and delivering cost around the world as a credible and proven alternative to other
effective offshore solutions based on its unique cylindrical hull floating installation designs. The inherent advantages are well
design and the HiLoad LNG offloading and regas technologies. understood. Amongst these are lower operating costs, favorable
motion characteristics, high deck load capacity, large storage
Sevan Marine is focusing its efforts on independently developing, space and substantially lower construction cost compared with
marketing and supporting projects based on its designs and alternatives where a turret is needed.
engineering competence. In doing such, the company is seeking
to work with industry leading partners to further promote and The HiLoad LNG offloading and regas technology is an
develop its designs, concepts and services. innovative solution allowing direct loading, offloading and
regasification of LNG, minimizing major capital investments.
Oslo, February 28, 2018
The Board of Directors of Sevan Marine ASA
Erling Øverland Peter Lytzen
Chairman Board Member
Ingvild Sæther Torstein Sanness Kathryn M. Baker
Board Member Board Member Board Member
Vidar Andersen Ann-Kristin Nielsen Løvland Reese McNeel
Employee Representative Employee Representative CEO
6Fourth quarter 2017
Interim financial statements (IFRS)
Condensed consolidated income statement
NOK million Q4 17 Q3 17 2017 Q4 16* 2016*
Continued operations
Operating revenue 16.3 12.8 54.3 18.3 117.1
Operating expense -22.6 -39.4 -116.6 -34.2 -221.1
EBITDA -6.2 -26.6 -62.3 -16.0 -104.0
Depreciation, amortization and impairment -0.5 -0.5 -2.2 -2.0 -3.3
Operating profit/(loss) -6.7 -27.1 -64.6 -18.0 -107.3
Financial income/(expense) 0.8 0.6 11.5 -0.6 -127.7
FX gain/(loss) 4.0 -3.6 -3.4 9.1 -12.2
Net financial items 4.8 -3.0 8.1 8.5 -139.8
Profit/(loss) before tax -2.0 -30.1 -56.5 -9.5 -247.1
Tax income/(expense) -6.5 0.0 32.8 -0.2 5.7
Net profit/(loss) continued operations -8.5 -30.1 -23.7 -9.7 -241.4
Discontinued operations
Disposed group classified as held for sale 0.0 0.0 -10.1 -1.3 25.1
Net profit/(loss) discontinued operations 0.0 0.0 -10.1 -1.3 25.1
Net profit/(loss) -8.5 -30.1 -33.8 -11.0 -216.3
Statement of comprehensive income
NOK million Q4 17 Q3 17 2017 Q4 16* 2016*
Net profit/(loss) -8.5 -30.1 -33.8 -11.0 -216.3
Actuarial gains/losses 0.0 0.0 0.0 0.0 -0.7
Foreign currency translation -1.0 0.0 -1.0 0.0 0.0
Other changes -0.1 0.0 -0.1 0.0 0.0
Total comprehensive income -9.6 -30.1 -34.9 -11.0 -217.0
* Restated due to change of presentation currency from USD to NOK see Note 1 for further information
7Fourth quarter 2017
Condensed statement of financial position
NOK million Note 31.12.17 30.09.17 31.12.16*
Fixed assets 0.1 0.2 1.4
Intangible assets 4.3 4.7 5.9
Other non-current assets 3 3.2 3.5 46.7
Total non-current assets 7.6 8.4 54.0
Trade and other receivables 3 16.1 52.3 22.2
Cash and cash equivalents 197.5 161.6 213.9
Total current assets 213.6 214.0 236.1
Assets held for sale 75.5
Total assets 221.2 222.4 365.5
Share capital 2 210.4 210.4 210.4
Other equity -26.7 -17.1 -0.7
Total shareholders' equity 183.7 193.4 209.7
Non-controlling interest 0.3 0.2 9.2
Total equity 184.0 193.6 218.9
Retirement benefit obligations 0.0 0.0 6.4
Other non-current liabilities 2.3 0.0 0.0
Total non current liabilities 2.3 0.0 6.4
Current liabilities 34.9 28.8 77.1
Total current liabilities 34.9 28.8 77.1
Total liabilities 37.1 28.8 83.4
Liabilities held for sale 63.2
Total equity and liabilities 221.2 222.4 365.5
* Restated due to change of presentation currency from USD to NOK see Note 1 for further information
8Fourth quarter 2017
Condensed statement of changes in equity
Non-
Share Share Retained controlling Total
NOK million capital premium earnings interest equity
Equity as of December 31, 2016 (Restated) 210.4 122.9 -123.6 9.2 218.9
Total comprehensive income for the period -26.0 -9.0 -34.9
Equity as of December 31, 2017 210.4 122.9 -149.6 0.3 184.0
Non-
Share Share Retained controlling Total
NOK million capital premium earnings interest equity
Equity as of December 31, 2015 (Restated) 210.4 122.9 96.4 6.1 435.9
Total comprehensive income for the period -220.1 3.1 -217.0
Equity as of December 31, 2016 (Restated) 210.4 122.9 -123.6 9.2 218.9
Condensed statement of cash flow
NOK million Q4 17 Q3 17 2017 Q4 16 2016*
Cash flows from operating activities
Cash from operations 35.8 -17.5 -49.7 4.8 -44.3
Taxes paid/repaid 0.0 0.0 31.7 0.0 -31.7
Net cash generated from continued operating activities 35.8 -17.5 -18.0 4.8 -76.0
Net cash generated from discontinued operating activities 0.0 0.0 25.1 2.4 -40.2
Net cash generated from operating activities 35.8 -17.5 7.1 7.2 -116.2
Cash flows from investment activities
Sale of shares KANFA Aragon AS 0.0 0.0 0.0 0.0 20.0
Sale of shares KANFA AS 0.0 0.0 0.9 0.0 0.0
Sale of fixed assets 0.1 0.0 0.7 0.0 0.0
Net cash from continued investment activities 0.1 0.0 1.6 0.0 20.0
Net cash from discontinued investment activities ** 0.0 0.0 -37.1 0.0 0.0
Net cash from investment activities 0.1 0.0 -35.5 0.0 20.0
Cash flows from financing activities
Dividends paid 0.0 0.0 0.0 0.0 0.0
Net cash from continued financing activities 0.0 0.0 0.0 0.0 0.0
Net cash from discontinued financing activities 0.0 0.0 0.0 0.0 0.0
Net cash from financing activities 0.0 0.0 0.0 0.0 0.0
Net cash flow for the period - continued activities 35.9 -17.5 -16.5 4.8 -56.0
Net cash flow for the period - discontinued activities 0.0 0.0 -12.0 2.4 -40.2
Cash balance at beginning of period 161.6 179.1 225.9 218.7 322.1
Cash balance at end of period 197.5 161.6 197.5 225.9 225.9
Cash balance at end of period continued operations 197.5 161.6 197.5 213.9 213.9
Cash balance at end of period discontinued operations 0.0 0.0 0.0 12.0 12.0
* Restated due to change of presentation currency from USD to NOK see Note 1 for further information
** Reflects the cash position in KANFA Group before deconsolidation.
9Fourth quarter 2017
Selected notes to the quarterly financial statements
1. General information and accounting policies
Sevan Marine ASA is a technology, project development and engineering company.
Sevan Marine ASA is a public limited company, incorporated and domiciled in Norway. The condensed consolidated interim financial
statements consist of the company and the company’s interests in associated companies.
The company prepares its financial statements in accordance with International Financial Reporting Standards (IFRS) as adopted by EU
and these financial statements have been prepared in accordance with the International Accounting Standard for Interim Financial
Reporting (IAS 34). As the interim financial statements do not include the full information and disclosures as required in the annual
financial statements, it should be read in connection with the Annual Financial Statements for 2016.
The company has changed the functional and presentation currency to Norwegian Krone (NOK) from USD. The company has done a
reassessment of the functional and presentation currency based on the relevant IFRS accounting standards and has concluded that the
functional and presentation currency shall be changed to NOK from USD with effect from January 2017. The rationale for this change is
that the vast majority of the company’s revenue, cost and assets are based in NOK. All financial figures, including comparable figures,
are now presented in NOK.
The European Securities and Markets Authority (ESMA) issued guidelines on Alternative Performance Measures (“APMs”) that came
into force on 3 July 2016. Sevan Marine has defined and explained the purpose of the following APMs:
Operating cost, excluding one-off items: Management believes that “Operating cost, excluding one-off items” which
excludes cost or cost reductions that arise from circumstances other than operation is a useful measure because it provides
an indication of the company’s operating cost base for the period without regard to significant historical and non-operational
events that are expected to occur less frequently.
Adjusted EBITDA: Management believes that “Adjusted EBITDA” which excludes “Operating cost, excluding one-off items” is
a useful measure because it provides an indication of the profitability of the company’s operating activities for the period
without regard to significant historical and non-operational events that are expected to occur less frequently.
In June 2017 Sevan Marine ASA sold the remaining shares in KANFA AS to Technip Norge AS. The KANFA AS Group was the
remaining part of Sevan Marine’s Topside and Process Technology segment presented as discontinued operations. As Sevan Marine
now is left with one segment, Floating Production, the segment note will not be part of the quarterly reporting.
The accounting policies adopted in the preparation of the interim financial statements are consistent with those followed in the
preparation of the Annual Financial Statements for the year ended December 31, 2016.
10Fourth quarter 2017
2. Shareholder structure
20 largest shareholder accounts February 23, 2018 (source: VPS) No. of shares %-share
TEEKAY SERVICE HOLDINGS COÖPER. UA 22,893,631 43.52
DNB NOR MARKETS, AKS 5,107,016 9.71
SKANDINAVISKA ENSKIL 3,213,975 6.11
MATHIAS HOLDING AS 1,700,000 3.23
KING KONG INVEST AS 1,250,000 2.38
SUNDT AS 1,142,486 2.17
MP PENSJON PK 837,584 1.59
ANDENERGY AS 804,326 1.53
INVESCO PERP EURAN S 765,804 1.46
CITIBANK, N.A. 750,480 1.43
BAKLIEN ÅSMUND 700,000 1.33
HORTULAN AS 685,000 1.30
BEKKESTUA EIENDOM AS 560,000 1.06
ALTEA PROPERTY DEVEL 500,828 0.95
SVENSKA HANDELSBANKE 493,000 0.94
GRANLUND HOLDING AS 427,201 0.81
INVESCO FUNDS 419,109 0.80
SIX SIS AG 413,936 0.79
TIGERSTADEN AS 330,000 0.63
PREDATOR CAPITAL MAN 315,072 0.60
Total, 20 largest shareholders 43,309,448 82.33
Other shareholder accounts 9,297,551 17.67
Total no of shares 52,606,999 100.00
Foreign ownership 26,859,378 51.06
3. Transactions with related parties
NOK million Q4 17 Q3 17 2017 Q4 16* 2016*
Sale to related parties
Sale to Teekay 3.3 0.8 4.0 0.0 1.4
Sale to Logitel Offshore 0.0 0.0 0.0 0.0 21.0
Purchase from related parties
Purchase from Arendal Brygge 1.1 1.1 4.6 1.1 3.8
Receivable from related parties
Receivable from Logitel Offshore 0.0 35.9 0.0 51.6 51.6
Receivable from Teekay 0.2 0.0 0.2 0.0 0.0
Loan to related parties
Logitel Offshore 0.0 0.0 0.0 51.6 0.0
* Restated due to change of presentation currency from USD to NOK see Note 1 for further information
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